Stevenson, Jaques & Co v McLean is an important English contract law decision dealing with communication of acceptance, telegraphic enquiries, and revocation of offers. The case contrasts the rules applicable to acceptance by telegraph with the postal rule, placing emphasis on when a revocation becomes effective and on the distinction between a counter-offer and a request for information. The judgement clarifies how enquiries affect an existing offer and when an offeror is free to withdraw an offer.
Facts of Stevenson, Jaques & Co v McLean
The plaintiff firm, Stevenson, Jaques & Co, were iron merchants who purchased iron with the intention of reselling to third parties. The defendant, McLean, held warrants or titles to quantities of iron. On Saturday 27 September, McLean sent a telegram to Stevenson offering to sell the iron at a price of “40s., nett cash, open till Monday.” This formed the original offer and stated expressly that it would remain open until Monday.
On Monday morning, Stevenson sent a telegram to McLean asking whether he would accept payment of forty for delivery over two months, or, if not, what the longest limit would be for payment. This message was a telegraphic enquiry asking whether McLean would consider modifying the terms of the offer. McLean did not respond to this enquiry. Later the same day, he sold the iron warrants to another party.
At 1.25pm on the Monday, McLean sent a telegram to Stevenson stating that all the warrants had been sold. Before receiving this communication, Stevenson sent a telegram at 1.34pm accepting McLean’s original offer of “40s., nett cash, open till Monday.” Stevenson subsequently sued McLean for non-delivery of the iron warrants, alleging breach of contract.
Issues
Stevenson, Jaques & Co v McLean raised several key issues:
- Whether the plaintiff’s telegraphic enquiry amounted to a counter-offer.
If the enquiry constituted a counter-offer, it would have extinguished the defendant’s original offer, as a counter-offer operates as a rejection of the original terms. - Whether the defendant was entitled to revoke his offer before acceptance.
This required examination of the effect of the statement that the offer was “open till Monday”, and whether a unilateral promise to keep an offer open is binding. - Whether the defendant’s telegram at 1.25pm effectively revoked the offer even though it was not received by the plaintiff until after the plaintiff had sent their acceptance.
The question was whether revocation is effective upon sending or only upon communication.
These issues centred on the nature of the plaintiff’s initial enquiry, the rules on revocation, and the timing of communication between the parties.
Stevenson, Jaques & Co v McLean Judgement
Lush J delivered judgement. The judge held that the plaintiff’s telegram on Monday morning was not a counter-offer. Instead, it was a mere enquiry seeking clarification about whether McLean would be willing to vary the offer terms.
There was nothing in the wording that suggested rejection of the original offer. This approach distinguished the case from Hyde v Wrench, where there had been a clear counter-offer that extinguished the original offer.
Since the enquiry did not reject the offer, the original offer remained open. McLean was free to revoke the offer before the end of Monday because a promise to keep an offer open is not binding unless supported by consideration.
However, applying the principle recognised in earlier cases, a revocation is only effective when actually communicated to the offeree. McLean’s telegram stating the warrants had been sold was not received by Stevenson before they sent their acceptance at 1.34pm. Therefore, the revocation had no effect.
Because the revocation had not reached Stevenson before they communicated acceptance, Lush J held that a binding contract had been formed. The court ordered the defendant to pay the plaintiffs £1,900, subject to any future adjustment.
Reasoning in Stevenson, Jaques & Co v McLean
Lush J examined the wording of Stevenson’s telegraphic enquiry. The message asked whether McLean would accept payment over two months or what the longest limit allowed would be.
According to the judge, this was not an attempt to propose new terms in place of the original offer but simply a question seeking further information. In Stevenson, Jaques & Co v McLean, the iron market was volatile, and such enquiries could reasonably be regarded as part of negotiation rather than an intention to reject the standing offer.
The judge contrasted this with Hyde v Wrench, in which the plaintiff made a clear counter-offer and thereby rejected the original terms. In the present case, no such rejection occurred. The language did not suggest a refusal, and a reasonable person would not interpret the enquiry as a counter-offer.
On the question of revocation, McLean argued that the offer was no longer available once he had sold the iron warrants. He relied on Cooke v Oxley, but Lush J held that this case did not support the defendant’s position.
The correct principle derived from Cooke v Oxley is that a unilateral promise to keep an offer open is not binding and can be withdrawn at any time before acceptance. However, any revocation must be communicated to the offeree.
Lush J supported this principle by referring to American authorities such as Tayloe v Merchant’s Fire Insurance Co and Byrne & Co v Leon Van Tienhoven & Co. These cases confirm that a revocation is ineffective unless and until it actually reaches the party to whom the offer was made.
In Stevenson, Jaques & Co v McLean, the telegram sent by McLean at 1.25pm notifying Stevenson that the warrants had been sold was an attempted revocation, but it had not been received before Stevenson’s acceptance at 1.34pm. Since the law requires actual communication of revocation, the offer remained open at the time acceptance was sent.
Thus, causation was clear: the effective acceptance preceded any effective revocation, and a binding contract was formed.
Conclusion
In summary, Stevenson, Jaques & Co v McLean confirms that an enquiry is not necessarily a counter-offer, that revocation must be communicated to be effective, and that an offeror’s promise to keep an offer open is not binding unless supported by consideration. Because Stevenson’s enquiry did not reject the offer, and because McLean’s revocation was not communicated before acceptance, a binding contract was formed.